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Four priorities for the federal budget: Goar

The way to spur economic growth is to focus on Canada’s struggling labour market, says the C.D. Howe Institute.

As they approach their first budget, Finance Minister Bill Morneau’s Liberals are already looking at a deficit of at least $20 billion, double what they projected last fall.
(Sean Kilpatrick / THE CANADIAN PRESS)

One of the harsh lessons Canadians learned in the last decade is that the quality of job creation matters almost as much as the quantity.

A job that doesn’t pay enough to live on — let alone support a family — is not the kind of employment most Canadians seek. A life of low-wage, precarious work is not the kind of “recovery” they envisaged when Canada emerged from the 2009 recession.

This truth never penetrated Stephen Harper’s government.

Year after year, the federal finance minister would proudly announce on budget day that Canada had created tens of thousands of jobs — without mentioning that a growing number were part-time, temporary, casual or short-term. To federal statisticians, finance department officials and cabinet ministers, any job was an employment gain. To laid-off workers and hard-hit communities, these new jobs were a shabby replacement for the full-time positions lost in the manufacturing sector, outsourced to other countries or cut by employers seeking to improve their bottom lines. Many workers needed two — even three — to pay their bills.

Former finance minister Joe Oliver’s last budget was a textbook example of this wilful blindness. “Our government’s priority has always been the creation and protection of opportunity for Canadians,” he boasted. “Indeed, since the depth of the global recession, Canada has had one of the best job-creation records in the G-7.”

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Before the cycle starts again under Justin Trudeau’s government, economist Craig Alexander of the C.D. Howe Institute has put forward four litmus tests for next week’s federal budget:

It should make “upskilling” a priority. Creating middle- and low-skill positions won’t spur economic growth or generate the prosperity the Liberals are promising. To raise workers’ incomes, boost productivity and withstand swings in commodity prices, Canada needs a better-trained workforce.

It should put employment insurance reform at the top of the federal agenda. The current system is inequitable, outdated and covers fewer than half of the unemployed.

It should undertake to provide Canadians with timely, relevant information about the labour market. Graduates need to know which skills are needed in which regions; students need to know which occupations offer the best employment prospects; laid-off workers need to know where there are job vacancies. Neither Statistics Canada nor the federal department of labour publishes this kind of information (although they have the raw data to produce it).

It should signal Ottawa’s intention to bring all working-age Canadians into the labour force. As the nation ages, it will become increasingly important to utilize the pools of labour — youth, immigrants, aboriginals, people with disabilities — that are largely untapped. That means systematically dismantling barriers such as unrecognized credentials, lack of marketable skills and prejudice.

The overarching challenge, Alexander says, is to ensure that Canada’s workforce keeps pace with changing times.

Government stimulus, whether it is infrastructure spending or middle-class tax cuts, won’t change that. “In the final analysis, addressing the many opportunities for improvement in labour markets is a key ingredient in delivering more prosperity to Canadians.”

Ottawa can’t do it alone, he acknowledges. “However, a case can be made for strong federal leadership.”

To Trudeau’s credit, he has taken — or pledged to take — several corrective steps: add $300 million to Ottawa’s youth employment strategy, transfer an extra $500 million a year to the provinces to open more training programs, offer employers a 12-month break on the employment insurance premiums of all young Canadians for permanent positions, expand pre-apprenticeship programs so more young people can enter the skilled trades, underwrite 5,000 green jobs for youth in each of the next three years, and lower the number of hours required by new workers to qualify for EI benefits. That would be a reasonable start.

Whether these election commitments end up in Finance Minister Bill Morneau’s budget next Tuesday remains to be seen. The Liberals are already looking at a deficit of at least $20 billion, double what they projected last fall.

Alexander understands fiscal realities. He worked as a federal bureaucrat, a private forecaster and chief economist at the TD Bank before joining the C.D. Howe Institute last spring. But he sees the bigger picture. His advice is clear: Start with good jobs and the rest will follow.

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